The European auto industry is in bad shape, at least according to the assessments of two U.S.-based international conglomerates.
European lawmakers are expected to unveil their new draft proposal for an environmental law on Wednesday, and executives from Stellantis and Ford are contributing their perspectives to the conversation.
Ford Model e losses by year
- 2025: $3.6 billion (year to date)
- 2024: $5.1 billion
- 2023: $4.7 billion
- 2022: $2.2 billion
Last week, John Elkann, Stellantis chairman, spoke publicly about the legislation, stating that the auto industry has shared its own package of proposals to help shape the legislation, as concerns persist that the EU will strengthen its emissions targets and mandates to phase out the sale of internal combustion engines.
“There is another way to cut emissions in Europe in a constructive and agreed way, restoring the growth we have lost and people’s needs,” Elkann said. If it doesn’t, he says, the European auto industry risks an “irreversible decline.”
The EU has already set a goal of reaching zero exhaust-pipe emissions for new cars by 2035.
Photo by jetcityimage on Getty Images
EU Commission rules are set to change, again
Europe aims to achieve a 55% reduction in fleetwide CO2 emissions by 2030 and a complete elimination by 2035. Those emission standards for new passenger and light commercial vehicles in the EU have been in place since 2023.
However, as EV adoption has stalled, those targets have seemingly become unattainable. So, in May, the standards were amended to include an averaging provision for the 2025-2027 period, allowing manufacturers to comply with the targets by averaging their performance over the three years.
Related: Ford CEO Jim Farley celebrates $1 billion ‘common sense victory’
The EU Commission has promised to submit a “progress report” this year and will issue a new one every two years thereafter.
The latest report is scheduled for release on Wednesday, December 10.
Ford CEO Jim Farley warns European regulators against making a big mistake
On Monday, Ford CEO Jim Farley brushed off his typewriter and wrote an op-Ed in the Financial Times entitled “Europe is risking the future of its auto industry.”
In the letter, Farley said the auto industry was looking at Europe “with concern – again” as it awaits the latest update to emissions rules. The central thesis of his argument is that the EU can not mandate EV demand.
Regardless of the targets the government sets, if buyers don’t want the vehicles, they won’t buy them.
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“The elephant in the room is that European customers — both individuals and businesses — simply are not buying EVs in big numbers,” Farley said.
European policymakers say they want a sustainable auto industry. But setting unrealistic regulations only to adjust them at the end of each year when consumers do not show up is a recipe for turmoil.”
He said the “mandate it, and they will buy it” approach has failed; the Commission must align carbon targets with actual market adoption and provide manufacturers with a “realistic and reliable 10-year horizon.”
According to Farley, Europe’s rules are opening the door for increased competition from state-subsidized EVs from China to dominate the market as Chinese brands have doubled their market share in the region in just 12 months, reaching a record 5.5% in August.
This is having a ripple effect on Europe’s automotive production, as the region lost 90,000 auto industry jobs in 2024 alone, according to Farley, and EU vehicle production remains 3 million units below pre-Covid levels.
Farley also called out the UK auto industry.
“The UK government recently announced a new tax to charge EV drivers 3p for every mile driven, while at the same time offering a discount of up to £3,750 on a new EV. One foot on the gas, one on the brake: these kinds of contradictions leave buyers confused and frustrated,” Farley said.
Ford CEO Jim Farley has solution for EU automotive issues
Farley didn’t spend the entire op-Ed pointing out the industry’s obvious issues; he also offered a couple of solutions.
“We need to incentivise this transition. European manufacturers have invested hundreds of billions in EVs,” Farley said. “Governments must match that commitment with consistent incentives to buy them and a charging infrastructure that extends beyond wealthy urban centers into rural areas.”
November Ford sales by Brand
- Ford F-150 Lightning: 1,006 (-72%)
- Ford Mustang Mach-E: 3,014 (-49%)
- Ford SUVs: 55,888 (-3.7%)
- Ford Bronco: 11,045 (+7%)
Source: Ford
Farley said they should eliminate regulations that treat vans “like luxury sedans.” Farley called the tax on commercial vehicles a tax on the “backbone of Europe’s economy.”
“These are tools for plumbers, florists and builders. Aggressive carbon targets on commercial vehicles unfairly penalize the small and medium-sized businesses that generate more than 50% of Europe’s GDP,” Farley said.
Related: Ford Motor adds to record it is embarrassed to hold
